What happened: why IIT became “mixed” in August
A typical situation this year. As usual, the accountant calculates the salary in 1C for August, posts the payroll statement, and on 30 August transfers to the employee the amount calculated by the program. It later turns out that the net amount is lower than in previous months, even though the salary has not changed. The employee is dissatisfied and asks for an explanation and sometimes an additional payment.
A review of the calculation shows that IIT was withheld at two rates at once: part at 10% and part at 15%. This is because in August, the employee’s taxable income accumulated since the beginning of the year exceeded the threshold of 8 500 MCI. From that point, the program applies a progressive scale: income up to the threshold is taxed at 10%, while the amount above it is taxed at 15%.
In other words, 1C did not make an error or “double” the tax. It did what the new IIT calculation procedure requires: it accounted for income on a cumulative basis and, in the month when the threshold was crossed, divided the taxable base into two parts. Therefore, IIT for August was higher and the amount payable was lower.
Who this applies to
Primarily, employees with high annual income. In practice, these are:
- executives and key specialists with high salaries; - employees who received large one-off payments during the year: awards, bonuses, compensation for unused leave; - employees who had several large accruals in one period.
- It is important to understand that crossing the threshold is not a one-off event in a single month. If an employee exceeded 8 500 MCI in August, then in September, October, and through the end of the year, their taxable income will already be entirely above the threshold. This means that in subsequent months, IIT will most likely be withheld at 15% from the entire taxable amount, and the employee will receive even less net pay than in August. It is best to warn them in advance to avoid repeated questions.
- How to check whether 1C calculated everything correctly
- Before making any corrections, make sure the calculation is correct. We recommend using the following checklist:
- 1. Reconcile the accumulated taxable income since the beginning of the year. Generate a report on the employee’s accruals and deductions for the period from January through August and verify that it includes all accruals, including bonuses and vacation pay.
2. Check the tax deduction application. In practice, IIT discrepancies are often related not to the rate but to the deduction. For example, if the deduction application was entered with a date other than the employment start date, the deduction for the first month is not applied in full, and the balance is automatically carried forward to subsequent months. As a result, IIT fluctuates from month to month.
3. Account for the carryforward of unused deductions. If income in certain months was insufficient to apply the deduction in full, the program carries the balance forward to subsequent periods until it is fully used. This is normal and also affects the IIT amount.
4. Review how IIT for August is split. The payslip and registers should show which portion of the tax was calculated at 10% and which portion at 15% on the excess amount.
5. Reconcile the amount paid with the amount calculated. If, in any month, the employee was paid an amount different from the amount calculated in 1C, an amount payable or overpayment arises, which also changes the amount to be paid. - What to do if the employer decides to preserve the employee’s previous net pay
- Sometimes management decides that the employee should not lose money and that the difference must be compensated. It is important to understand that the tax cannot legally be “reduced.” The employer can only increase the accrual so that the previous net amount remains after IIT is withheld at the new rates.
- In practice, this is formalized by changing the salary retroactively. The procedure in 1C is as follows:
- 1. Formalize the HR decision. Create and post an order retroactively changing the salary, effective from the beginning of August.
2. Recalculate the salary. Go to Payroll — Payroll Accrual and recalculate the employee’s pay using the new salary.
3. Create a new payroll statement. In Payroll — Salary Payable, create a new payroll statement. The program will automatically populate only the outstanding difference between the new calculation and the amount already paid.
4. Do not modify the old documents. Do not change the payroll statement or payment order under which the salary was paid on 30 August: the payment has already been made, and editing the original documents will cause confusion in the accounting records.
5. Check settlements with the budget. Generate Reports — Trial Balance and check whether a red balance has appeared for taxes and contributions. An increase in the accrual also increases taxes and mandatory contributions, so the difference must be paid.
6. Pay the additional taxes and contributions. In Bank and Cash, create new documents for transferring taxes and contributions for the difference amounts, then save and post them. - Please note: increasing the salary also increases taxable income. Since the employee is already above the threshold, the additional payment will be taxed at the increased rate. Therefore, to restore the previous net amount, the salary will need to be increased by more than the visible difference. It is more convenient to determine the new salary through trial calculations in 1C rather than manually.
- Moreover, this decision affects the company’s expenses and all subsequent months. It should be agreed with management and formally documented rather than made as a “silent” accounting adjustment.
- Deadlines and points to note
- It is best to make adjustments before the reporting period is closed. If corrections for August are made after the reports have been submitted, supplementary reporting may be required. Confirm the specific deadlines and forms under the current provisions of the Tax Code and the clarifications of the SRC.
- Check that the program is up to date. The progressive scale works correctly only in the latest releases of 1C payroll configurations for Kazakhstan. If the calculation looks unusual, start by checking the version.
- Forecast the following months. Identify which other employees’ accumulated income is approaching 8 500 MCI and warn them and management in advance, especially before annual bonuses are paid.
- Keep the explanations. If an employee asks for an explanation, print the payslip showing the breakdown of IIT by rate. This resolves most questions.
Frequently Asked Questions
Why was IIT withheld at two rates at once—is this a program error? — No. In the month when taxable income since the beginning of the year crosses the threshold of 8 500 MCI, the portion of the base up to the threshold is taxed at 10%, while the excess amount is taxed at 15%. 1C performs this calculation automatically.
Will the net amount return to its previous level in subsequent months? — Most likely not. After crossing the threshold, the employee’s income through the end of the year is already above 8 500 MCI, so tax will be withheld at the increased rate, and the amount payable may be even lower than in August.
Can the old payroll statement be corrected and the difference paid under it? — No, there is no need to change the old payroll statement or payment order. Create a new payroll statement: the program will automatically populate only the outstanding amount.
If the salary is increased retroactively, will an increase equal to the “lost” tax amount be sufficient? — No, the increase is also taxed at the higher rate, and contributions are assessed on it. Therefore, the salary must be increased by more than the difference in net pay. It is more convenient to determine the new salary through a trial calculation in 1C.
Why does the employee’s IIT differ from month to month even though they have not yet exceeded the threshold? — Most often, the issue is the tax deduction: the application was entered with an incorrect date, or the unused deduction is carried forward to subsequent months. Check the date of the deduction application and recalculate the salary.